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Thursday, February 4, 2016

Since the era of internet portals, a big fraction of publishers of newspapers and magazines have only been helplessly watching how their media empire is drowning in a blaze of glory of digital sunrise. Now even those who have never complained about lack of popularity feel how the earth under their feet is slowly vanishing. A ruthless iceberg of global social networks and “Google” knows no mercy: since it has directed the flow of internet advertising revenue beyond the Atlantic, the media have to come up with new ways of staying keeping up with this “brand new world”.

Let us leave these apocalyptic prophecies aside. To understand the scale of the change we have been witnessing, we need to rely on facts and figures. Internet advertising is classified into several segments: banners, video advertising, search engine advertising, social networks advertising and classifieds. According to German statistic agency “Statista” , in 2014 all Lithuanian internet advertising market generated $73,5 million revenue. One year later, it grew up to $87,3 million. Search advertising gets the lion share: about $44 million. Banner advertising makes up a fifth of the total revenue, classifieds – about 15%, while video and social media advertising share the remaining part. In a nutshell, two-thirds of the revenue generated by internet advertising in Lithuania goes overseas: Lithuanians import a large number of advertising services from abroad, wholeheartedly believing “oh we are on our own.”

A ninth wave or just a jolt?

“Statista” forecasts that every year at least 20% of the number of search advertisements will increase and the tendency will only be rising. It means that traditional media will be losing more and more of advertising revenue, and this money will never ever return to Lithuanian publishers’ or broadcasters’ accounts. Where will it go? Straight to “Google”, “Facebook”, “LinkedIn” and other large international corporations’ pockets. In other words, our national TV, radio and newspaper agencies in the long run will not get a slice of the cake they used to get before. Last year, a dramatically honest “Delfi”, “15min.” and “Lietuvos rytas”, Lithuanian leading internet portals’, discussion with a business development manager for the Baltic states at Google, Vytautas Kubilius, took place at an organized by “Verslo žinios” digital media conference “Best Internet 2015”. The representative of US company did not even need to conceal his lax attitude towards local portals: as a matter of fact, they cannot compete in a big banner advertising world with a juggernaut of Google. There were attempts to convice him that local content and advertisements are crucially important, but they were futile: the representative of Google reminded who can move the goalposts as well as how advertisements find their customer. The owners of portals could do nothing but change the subject: the discussion turned to content marketing and all the upsides of the new emerging form of advertising.

Bearing in mind that big fish of advertising planning and media are currently creating their clients’ marketing and advertising campaigns using mainly Google tools and do not miss the opportunities offered by social networks, such a position of the representative of the large corporation does not surprise at all. The discussion reflects common tendencies like a polished mirror: well, to be precise, the incredibly giant losses of advertising revenue, which is usually if spoken about, only in undertones. If about two-thirds of internet advertising revenue goes not to publishers’ pockets, what kind of future awaits them? Perhaps, a suitable answer can be found on one of Lithuanian publishers’ website, who attempted to analyze the indicators of financial performance of one of the biggest media groups in the Baltic states, as well as how easy it is to buy their shares at the stock exchange: “The prospects of growing are complicated, since online media revenue hardly compensates for dramatically decreasing profit of both typographies and paper journalists. Therefore, investments in such companies are not my priorities, yet it is a handy tool of diversification.”

Who doesn’t want a funding?

Before new habits of advertising planning have not destroyed the basis of online media, Google offers a life jacket for Europe – “Digital News Initiative”. This is a funding program aimed at online media, whose aim is to support partners’ editorial offices and help them survive in the turbulent sea as well as create strong and interesting content. This program has attracted attention of more than thousands of media companies, among whom we can witness such giants as British BBC and “The Economist” or “Guardian”, German “Deutsche Welle”, Spanish “El Pais”, “Euronews”, Polish “Gazeta Wyborcza”, Italian “La Stampa”. If state and other organizations funding is a decent source of income for media, why is Google’s offer worse? The only difference is that media granted a status of ‘beggers’, not bosses as they used to be.

Owners of social network Facebook signed a contract with nine media companies: “The New York Times”, “National Geographic”, “BuzzFeed”, NBC, “The Atlantic”, “The Guardian”, “BBC News”, “Spiegel” and “Bild”. It is stated there that Facebook can publish part of informational content directly on the social network instead of sharing already published articles on publishers’ pages. They decided to sign this contract because people actively read articles on social networks.

According to the contract, Facebook will upload the publishers’ articles up to 10 times faster on a mobile portal. One of the most important advantages of the agreement is the fact that there will be no need to wait for approximately 8 seconds, needed to publish a piece of news on the social network. Truly inspiring cooperation... despite the frustrating losses.

A bit earlier Yahoo challenged international media corporation by creating its own news service and generating newsflow on their channels. Experts agreed that it is one more manifestation of the digital era, the one that, like news portals, will gradually become popular.

The faces of publishers darkened after Facebook had announced their plans. While such “cooperation schemes” like Google and Facebook’s are offered, the publishers are fed with bones from social networks and search engines’ feast table. No need to worry.

Move the goalposts?

If we agree that it is a must to pay advertising channels for advertising delivery, the only thing left is to analyze where the money we pay for spreading the word goes. If it is transferred to sunny California, passing by Vilnius, Kaunas and other Lithuanian towns, there is every chance that it will never go back in any form. Consequently, local publishers will have less and less high content to offer us. A vicious circle?

After all, it is not that important where advertisements are. What is much more important is what are viewers’ habits. Even more important is where advertising money will be: beyond the Atlantic or it will get back to local editorial offices and, consequently, economy.

A creator of virtual platform Adpays.me, Evgene Glebov states that he has been looking for alternatives to traditional internet advertising and has created a radically different channel to reach users. His offer is to eliminate agents and pay potential clients directly: for viewing advertisements. On Adpays.me, the majority of advertisements are interesting to the user, presenting the products and services the user likes.

Static with interactive functions, soon – animated banners on Adpays.me reach users only when they want to and click the button. An owner of own advertising board – APMboard can view advertisements s/he is interested in and gets money for viewing them. The system functions like a postbox, whose owner awaits advertisements of what s/he likes. Having clicked the refresh button, advertisements change, while the user account balance (shown on the screen) gets higher and higher. It means that the advertisers pays for the attention of his/her potential client. For the amount of attention the client decides to pay.

Evgene Glebov, CEO of registered in Estonia APM Agentuur startup, assures that it is one the cheapest ways of advertising that have ever existed. Yet the main benefit is that such the way of advertising is fair. A viewer of advertisements gets 90% of the budget spent by the advertiser, the remaining 10% are used to perform system administration. In case of traditional advertising, all the budget would go to the owners of Google or Facebook.

According to E. Glebov, the new advertising tool is bound to tackle the problems of local media, even though these problems are described as ‘unsolvable’. Paradoxically may it seem, but instead of hopelessly making every effort to attract more and more funds, publishers must bring back subscription, which will be paid with... the money people get for viewing advertisements on their APMboard! “We fully understand that so far to abandon advertising would mean nothing for media but a suicide. Yet it is not going to last forever: time shows us that the existing model of media funding must be changed. We are ready to cooperate with any news portal that will grant its readers the opportunity to pay for high-quality content and not see irritating advertisements. We will discuss any cooperation scheme and, surely, support financially,” “APM Agentuur” CEO explains.

So far it is only a fresh initiative, yet even such a relatively small project is a silver lining in the raincloud of the dominant advertising model.

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COMMENTS

Leidėjas 2016-01-29 10:30

There’s some truth because Google banners allow one to get a couple of cents, compared with the income one can get selling his banner directly to a client.

Aidas 2016-01-29 10:46

The offered model sounds quite attractive: a cheaper subscription in exchange for viewed ads or a more expensive subscription, however, without blinking ads. However, there’s a question whether publishers will be able to convince the users pampered by completely free content that they have to pay for journalists’ work? Even if there’s clear progress in understanding the order of things, a competition to prove that they have to pay this particular amount of money for that particular Lithuanian content is inevitable. This struggle’s going to be hard. Answer a question honestly: are your ready to pay for the content on DELFI, 15min, Lrytas and Verslo žinios news portals as it is now? Think what (for the same amount of money) The New York Times, The Guardian, The Economist or not that serious Wired or Verge have to offer? I’m for Verslo žinios success and am happy with VŽ subscription (Premium). Yet in the face of all these dilemmas I wouldn’t bet on the success of the offered subscription. For sure, it doesn’t mean they needn’t try it – in fact, they must.

Ignas 2016-01-29 11:08

Well, the only path I see is to create such content/service, which users would be glad to pay for, in your turn, you’ll be able to do what you do. Even Google offers an annual (monthly?) fee for not showing you any ads.

I’m keeping an eye on Google AdSense (a program for publishers). What I can say is that now the users of this program are weeping because the income is getting lower and lower rapidly (thanks to AdBlock/mobile).

Max@adpays.me 2016-01-29 11:54

Dear Aidas,

Lithuanians have already started to pay for content: they buy music and films, subscribe to channels and news. We can’t deny that the evolution is slow, but it’s only started. There is already an understanding, respect to publishers and their work, which means we can’t give up. I’ll never pay for Delfi – simply don’t read them. I have a VŽ subscription, and I’m also happy with it: I pay exactly they ask me for and even buy their journal. As a matter of fact, their model is ‘the golden mean’: there is both free and paid content.

Max@adpays.me 2016-01-29 11:59

I completely agree with you, Ignas, we have to create content users will be glad to pay for. I’ve never heard about this Google’s offer, but if it’s true and this service will be available, it’ll be the right turn. I don’t want to be sold to ‘some daddy’ and be raped just because he likes it and finds it funny. We should have paid for content from the very beginning.

Aidas 2016-01-29 12:13

Max, I agree with you too. I just want to draw your attention to the fact there is high possibility that this happy day when a critical number of users will pay for content is never going to come. Now there is a tiny fraction of people paying for legal software and content. The dominating part – users brought up by Android and Linkomania, who are OK with DELFI content.

Bearing in mind that society is naturally inert, the proposed advertising/subscription model is a bit late. I do hope I’m wrong with my negative forecasts, but so far the situation hasn’t been really favorable for Lithuanian publishers.

Max@adpays.me 2016-01-29 12:33

I completely agree: only a tiny fraction pays… But where are media moving? Feeding users with Kardashian-style news or still its aim is to educate? To my mind, it’s state responsibility to support high-quality media. News portals must ask for state funds. Yesterday I took part in a discussion ‘how to help Jazzfm radio station’, a situation there is painfully similar. But once the owner asked businesspeople for help, the office was so full that there was scarcely a place to sit. There are attempts to support great projects, we only need to invent an efficient mechanism.

ADPAYS.ME 2016-01-29 14:22

We thank you all for interesting opinions and remarks. We are happy you all understand that the existing system is wrong and it’s about time we changed everything. The problem, as it has been mentioned in the article, is that there are no global alternatives. Nevertheless, we are offering a local alternative that we hope will become global as well – APMboard. We pay users for their attention paid to advertisements that are interesting and useful for them. What we are trying to do is to foster users’ consciousness and remind that their attention is valuable. Users, in their turn, will pay portals, understanding that the time of working in editorial offices people is also worth money. This is the solution to “Kardashian-like” and dirt media problem – who wants, keeps up with the Kardashians , simultaneously struggling with aggressive ads, more conscious people will pay for high-quality content without irritating ads, while all ads s/he’s interested in s/he will view on his/her APMboard.

We mustn’t forget that media are responsible for a number of things. Having evaluated the existing business model, it seems that the most important media function is entertainment. We forget about educational as well as social functions. We forget that living according to “carpe diem” principle brings us only short-term pleasures: we think only about ourselves, but what we forget is that our children and grandchildren will live after us in the world we have created for them. The media whose function is to inform, educate, provoke to think and discuss issues will turn in a giant scrapyard, where (we are sorry to say that, but…) our children will be informational bumpkins, puppets in the hands of influential politics and large corporations, because nobody will be able to evaluate what’s going on critically. Is it what we want? If no, why don’t we do anything?

So we remind once more time: we are ready to cooperate with interested and understanding that something’s wrong publishers. We are ready to work together on partnership, discuss financial issues. We think that we have the solution – APMboard, everybody wins.

nobodypays.me 2016-01-29 15:30

Wow, see a dialogue’s taking place here. Just a couple of days ago found a really must-read article. The author compares two British media models The Guardian vs The Times and evaluates the results.

http://goo.gl/hEoSF3 Nothing special, but hits the nail on the head..

Reklamos pirkėjas 2016-01-29 16:28

10% is left to provide Google/Facebook administration? Oh pleeeaseee… how do specialists survive? The percent has to be at least 25-30

Adpays.me 2016-01-29 18:12

nobodypays.me, thank your, the articles just once more proves that the existing model is neither efficient nor professional.

Reklamos pirkėjas, you made a mistake: this money is used not to provide Google/FB administration, but system administration. You can register and see yourself: the cost of one display of one banner (without interactive functions) is 1 euro cent. This means that the user gets 0,9 euro cents, while we get 0,1. Well, it may look as not a really profitable model, but it’s fair: we don’t boast about our profit, but commercial aims are not primary, since what we are fighting for is the social idea.

Nevertheless, hypothetically, if every active FB user in Lithuania (the approximate number is 850,000) had APMboard, one display would cost 8500 Eu (provided that all users viewed this ad, since the advertiser pays only for real views) and we would get our 10% - 850 Eu. This number can be multiplied, depending on the number of advertisements and intensity. As you can see, everything’s transparent, there’s no hidden algorithm – we stand for fairness and openness.

Vytautas Kubilius @ Google 2016-01-29 18:13

Thank you for the interesting article and market analysis. I congratulate you on having launched your truly ambitious and useful project (also having written a gem of content marketing). I’m a bit upset by the fact that you understood our discussion that way, found these connotations in my comments. As a matter of fact, my point, surprisingly, was really similar to the one many have expressed. It’s high time somebody stated that there is a lack of transparency in the existing ecosystem as well as autoregulation and elementary customer respect. We need to speak out that ‘feeding’ our user with low-quality content and advertising that breaches all possible laws and ethical rules, expect that users and advertisers won’t run from such media (and the internet in general) is naïve and absolutely pointless. The popularity of AdBlocker is a direct result of such deformations, so if we don’t take steps to increase the transparency of the market, to create high quality content, to think about less irritating advertising forms as well as its amount, the negative tendency won’t disappear. It’s a pity that in Lithuania and the Baltic states it is not a top priority, instead, we are focusing on tiny tactical changes, such as generating advertisements views by chunking one-page article into 10 pages, filling one page with pop-ups of alcohol and gambling, putting 3 20 seconds commercial before a 20 seconds video. Perhaps it generates some income for a short period of time, but it can’t stop the user who votes with his/her feet or, in this case, with his/her fingers. Strong, high quality local content is absolutely essential: media is the fourth estate, after all. That’s why Google supports and will support colleagues and partners with technical solutions, consultations as well as such initiatives as Digital News Initiative. We are all in one boat, so it’d be great if the narrative “local vs non-local” isn’t artificially created J Have a nice weekend!

ADPAYS.ME 2016-01-29 19:05

Vytautas, thank you for your encouraging words and opinion. Yet we have to agree that the majority of existing problems, which have been mentioned in the article, is the result of the business model, which IT leaders are and have been using as the major model. Besides, as you have noticed, AdBlocker was born because of a negative and unfriendly to an average user atmosphere. In the strategic perspective, this model is going to harm the media and local businesses more and more. In our opinion, the best thing Google could do in this situation is to become paid and stop forcing Google programmers to develop “the code of negativity.”

Igoras 2016-01-30 08:42

I’ve never viewed a single FB advertisement. They never correspond with my interests. Regarding Google contextual advertising, AdBlocker blocks it, so I never see it.

Mk 2016-01-30 10:21

Self-comforting and daydreaming. Advertising by default is bad, because users are forced to view it. More and more people will be using AdBlock and software like that. Just die.

max@adpays.me 2016-01-30 12:25

Igoras, a normal life in every country depends on small and medium businesses’ life quality. Blocking ads, we block any path to ourselves… In so doing, we destroy our local economy. We believe that advertising is good, but ways of its delivery aren’t. If local businesses and users agree on a meeting platform, we think that all problems will be solved. Businesses won’t need to attack us with advertisements, instead, they’ll tell us about themselves in a friendly and courteous manner. We, in our turn, will be open to their offers. There will be no hatred and no aggression J The relationship will be healthy, and our businesses will advertise their goods and services responsibly.

max@adpays.me 2016-01-30 12:28

Mk, advertising is bad when it turns into spam. We have created a platform where one registers voluntarily and checks his/her APMboard to find out if there are any interesting offers. Advertising is by default GOOD, just think how many great offers we get. Our joy disappears when we feel hatred towards chasing us advertisements. Let’s be open to our business at least in one place and we are sure all problems will be solved! J

Mk 2016-01-30 14:24

Max, do you really think that mature people earning enough money will spend their time viewing ads? Or your target audience is the poor, ready to view ads for a couple of cents?

max@adpays.me 2016-01-30 19:03

Perfect question, thanks MK. There are 11,000 users in our system, 2789 of whom are businesspeople or senior managers (I’m counting only those who mentioned that). So what you’re saying isn’t true: our target audience is not “the poor”. Btw, now you do it completely free, so the money goes to California J A word about ‘the poor’: if you see ads on Google or Facebook it’s OK, if somewhere else – you are automatically classified as the poor J We are aiming at all Lithuanians, whom you can target using filters better than anywhere else J

Laimonas 2016-02-01 08:04

Only 8 years ago the cheapest (though exctincting now) form of advertising was yellow pages. Are we going back to it? Who’ll need – find. Lithuanian media are all tabloid-like – and only because we’ve been saving for 20 years and ignoring the quality of content, which has spoilt many reasers and viewers. Everybody’s OK with ‘cheap and nasty’, that’s why nobody wants to pay for ‘news’, whose heading doesn’t correspond with its content. I’d love to subscripe a paper, it allows to sop and think, whereas the internet makes us rush – WHERE?

Laimonas, we fully agree with you! We are trying to create the environment that will be different from the one now. To my mind, we don’t need to cut trees anymore to read a couple of articles (it’s a bit old-fashioned, you know) J How to change the existing situation? The only way is to pay for good journalists’ work and, in so doing, contribute to the formation of a new good practice.

I’m inviting all journalists who expressed their opinion here to contact me max@adpays.me and continue our discussion face to face. I believe together we’ll sort it out.